Tax Advisors: The Difference Between Small Business Prosperity and Struggle

Before starting a new business, many entrepreneurs wonder if they need a tax advisor. They may have prepared their own personal tax returns in the past and feel comfortable with that process. However, equating experience with your own personal tax returns and a business tax returns is a little bit like comparing reading a newspaper article and a Russian novel. Obviously, the Russian novel will take copious hours of reading and, to do it right, intense study.

An experience CPA can help a new business startup in many ways, beginning with proper planning, organization and choosing the right business structure.

If small business owners lack one thing, it’s time. Setting up and running a business requires the owner to wear multiple hats and deal with unexpected contingencies. Just getting the business off the ground and steering it to profitability is a heroic task. This leaves little time for the Russian novel that is the U.S. tax code for businesses. When businessowners take on taxes by themselves, they inevitably must rush and mistakes are made. Hiring a professional tax advisor prevents those mistakes, saves time and ultimately helps the business attain profitability.

If you are starting a business and wondering if should speak to a tax advisor first, the answer is an unequivocal yes. To obtain the best tax treatment for your fledgling company, you need to set the business up right for tax purposes. A tax advisor will walk you through the process and help you choose the most advantageous way to legally structure your business.

In addition, a tax professional helps create the infrastructure your business needs to track expenses, income and other financial data so you are prepared for tax season. By setting up your tax infrastructure right at the start, you gain peace of mind by always knowing where your business stands in terms of taxes. There should be no reason to sweat when tax season comes around.

Consider these six important reasons a small businessowner needs a tax advisor.

Tax complexity

New tax laws are passed every year on the federal, state and local level. A tax advisor tracks these and understands how to maximize the beneficial changes and mitigate damage from tax law that hurts your business. Small businesses also must manage income tax withholding and reporting, as well as healthcare reporting for employees. A tax advisor handles these tasks. If these tax responsibilities are neglected, severe tax penalties can be assessed against a business and its owner(s).

Time is money

This adage applies most of all to the new businessowner. Most new companies take several years to turn a profit. For your business to succeed, you need all the focus of your working hours on bringing your business into the green. It’s better to let a pro take care of the taxes. Besides, most new businessowners have families and other important life events occurring outside of work. Who has hours and hours to spare trying to deal with the tax code?

Tax advisors save you big money

How would you like to spend the weekend poring over tax law looking for deductions? Worse, how about spending a day with an IRS tax auditor when you need to be attending to your best customer? Experienced tax preparers already know the deductions you qualify for, and they guarantee you’ll get every break possible. They also do all the worrying about the IRS, so you can stay laser focused on delivering the big orders that makes your business succeed.

Mistakes cost big

John Q. Taxpayer, even John Q. Businessowner, makes tax mistakes. These can either result in overpayment or, perhaps worse, audits and penalties. Professionals don’t make these mistakes.

Peace of mind

Because you know your tax advisor will maximize your tax benefits and prevent any IRS trouble, you can sleep easy at night. Many businessowners have gotten themselves into trouble by burying their heads in the sand when it comes to taxes. They fall behind and, before they know it, they owe a sum that threatens to destroy the business they built. Hiring a tax pro from the start ensures this can never happen to you.

Long-range planning

Tax advisors take the long view. They understand that the taxes you pay this year affect what you’ll owe next year. Tax advisors can help you plan years in advance. Most like to meet at least once a year before tax time to review not just that year’s taxes, but the long-range tax planning that helps propel your new business into profitability.

Starting a business is a big decision. Success takes detailed planning and long-range thinking. In addition to planning the business model itself, entrepreneurs need to plan a tax model. When taxes are planned effectively, the U.S. tax code provides many benefits to small business owners that help them make their companies succeed. A tax advisor can model your business’s taxes from the start, maximize incentives and put your business on the path to prosperity.

Tax Avenger is a CPA / accounting firm that is dedicated and committed to providing exceptional service to our clients. If you are starting a business or your business needs accounting and tax services, we can help. Our services include business accounting and payroll services, individual and business tax preparation, tax problem resolutions and more! With over 18 years’ experience, our firm prides itself on the extensive international and local experience in accounting and taxation. Call us today to learn more with a Free Consultation!